From higher RRSP contribution limits to the scrapping of foreign content investment restrictions, the federal budget has plenty of important implications for the financial industry. However, Ottawa is also using the occasion to introduce several other structural changes, and to launch consultations on future legislative reforms.

Among the immediate changes, the government proposes to bump up deposit insurance coverage to $100,000 from $60,000, effective immediately. The limit was last changed in 1983.

At the same time, it is pledging to reduce overlap between the federal financial regulators, the Office of the Superintendent of Financial Institutions and the Canada Deposit Insurance Corp. This initiative was announced in the last budget, and the government is now moving ahead on that front.

As a result, OSFI will be primarily responsible for interacting with federal financial institutions and ensuring their solvency; CDIC’s role in ensuring institutions’ soundness will disappear. OSFI will also become solely responsible for reviewing new entrants into the financial sector and developing prudential rules and guidelines. A plan for streamlining their administrative functions is due from OSFI and CDIC to the minister by June 30.

Ottawa is also stepping up its efforts to fight money laundering and terrorist financing. It says it intends to seek the presidency of the Financial Action Task Force, the international standard setter on this front. And it will shortly be releasing a consultation paper proposing legislative and regulatory changes to implement the latest FATF standards.

It is also renewing the Integrated Proceeds of Crime initiative to the tune of $117 million over the next five years. This brings together RCMP investigators, Justice department counsel and other law enforcement officials to help seize profits and assets from criminal organizations.

On another front, the government pledges to introduce legislation in the spring to reform the governance framework of the federal financial institutions statutes, following earlier reforms to the Canada Business Corporations Act, which governs most federally incorporated businesses.

Finally, it’s contemplating legislative reforms in a host of areas. Amendments to the financial institutions statutes are due by October 2006, as part of a regular five-year review. The budget also includes a consultation paper that sets out directions for that review. The consultation period will run until June 1.

Among the issues up for consultation, the government is looking to: improve the disclosure regime, particularly for investment-focused products, registered plans, deposit accounts and complaint-handling procedures; remove the statutory restriction on residential mortgages exceeding 75% of the value of the property; address issues around disclosure and liability for electronic transactions; standardize cheque hold periods; possibly merge the Bank Act with the Trust and Loan Companies Act; and overhaul the regulatory regime facing credit unions and other cooperatives.

It is also seeking input on expanding the power of financial institutions to invest in commercial entities and undertake other commercial activities and how to simplify the regulatory framework around foreign bank entry, which it says has become unintentionally burdensome.